Isra-Mart srl: Chinese protests force chemical plant shutdown

China's promised crackdown on polluting industries has claimed a major scalp after the government responded to protests in the north-eastern port city of Dalian by ordering the shutdown and relocation of a large chemical plant.

The state-owned news agency Xinhua reported that more that 12,000 people demonstrated over pollution fears related to the Fujia chemical plant, which produces the potentially toxic chemical paraxylene, or PX.

The protests were sparked after Tropical Storm Muifa last week breached a dyke guarding the chemical plant, prompting fears that PX could leak into local water supplies and lead to an evacuation of some local residents.

PX is used in the production of polyester, but it can cause respiratory problems in humans, while prolonged exposure has been known to damage the nervous system and even cause fatalities.

Xinhua reported that there had been no leaks from the plant, but protestors still gathered yesterday to demand the closure of the plant, prompting a number of minor scuffles with police.

In a rare move, the news agency reported that the municipal committee of the Communist Party and the government had ordered an immediate shutdown of the plant, while local government officials told the crowd that they would move the plant out of the city.

The move marks the second time environmental protests have prompted the Chinese government to relocate a PX plant, after officials in the south-eastern city of Xiamen announced in 2007 that a planned chemical plant would be moved to a less populated area.

The decision is also the latest evidence that the Chinese government is seeking to tighten environmental regulations following a series of speeches and policy measures from senior government officials highlighting the need to curb pollution levels and carbon emissions.

Speaking ahead of the launch of the latest five-year plan in March this year, which contained a series of targets designed to reduce the carbon intensity of China's economy, premier Wen Jiabao said the government would actively move to better balance economic growth with the need to protect the environment. "We must not any longer sacrifice the environment for the sake of rapid growth and reckless rollouts," he said.

The shift in strategy could have a significant impact for heavy industry and manufacturing investors who have long regarded China as a market where relatively lax environmental regulations can allow for the rapid expansion of polluting industries.

In recent years, however, a host of measures have been deployed to try and tighten environmental regulations and law enforcement, while the government famously also moved to unilaterally shut down carbon-intensive factories in 2010 in order to ensure that energy-efficiency targets were met